European voter anger shows little signs of diminishing as the continuing
meltdown sparked by Mafiosi (see sidebar right) financiers
who collapsed the global banking system in 2007/8, leads inexorably
to sovereign defaults and Euro monetary doom.
Dithering Euroland governments have held meeting after meeting
in a desperate effort to stave off a general sovereign default
(a repudiation of debt service or restructuring which is effectively
bankruptcy), among leading industrialised Western nations, directly
linked to a crisis concocted by negligent regulators, complicit
and complacent politicians and their greed-driven banker friends.
As the cost of high unemployment, austerity measures, job insecurity,
pension grabs, real estate collapse, misery and discontent, wrack
Europeans, a public groundswell against the Euro and the Eurozone
seems to be kicking off.
Could the Euro collapse?
Might the groundswell
of anger extend to the EU project
itself and could the Euro really collapse?
Probably not is the answer to the last question, but the membership
of this currency union could be dramatically changed to include
just Germany, Austria, the Netherlands and Denmark, leaving the
remaining 13 member states to revert to their former currencies
- the French franc in our part of the world - or some other option
(see the sidebar right for the Rudo de Ruijter article)
Jean-Jacques Rosa, a liberal economist, university professor,
microeconomics and strategy consultant, who leads the Master of
Business Administration department at Paris Sciences Po, notes
in the video below:
"the end of the single currency is the best solution and
Greece only has one strategy left, that is to exit the euro
and default on its debt".
Meanwhile opinion polls suggest popular support for the Euro is
shrinking. The polls reflect rising popular discontent over the
currency due mainly to the harsh and socially disruptive remedies
imposed since the credit bubble burst. Between 29% and 39% of
French respondents, according to polls, want to leave the Euro.
Between 42% and 50% of French employees and 38% and 48% of French
employers hold the same view. In June 2010, a survey conducted
in Europe by a US polling institute reported that in response
to the question:
"Is the Euro a good thing for the economy?"
The answer "no" was shared by 67% of respondents in
France, 60% in Portugal, 56% in Spain, 55% in Germany and 53%
Return to the French Franc?
Jacques Sapir, a French economist and supporter of a return to
the Franc, recently shocked a France 3 TV audience when, citing
figures released by European monetary authorities, he said that
it will cost a further 1000 billion euros to recapitalise all
the banks in the European system, an amount that had to be raised
by the end of 2011. This he said, comes on top of the trillions
of taxpayer cash already spent by governments - which to all intents
and purposes have been captured by the bankers - to keep the system
afloat. In so doing governments have effectively privatised profits
and socialised losses, a win-win for the bankers but a huge burden
for us and several generations of our children.
Jacques Sapir also reminded his audience that the origins of
the current banking and sovereign debt crisis were not financial.
It all started, he said, when a credit bubble stoked by US bankers
saw US homeowners unable to meet mortgage obligations mainly because
the loans initially advanced to them were sub-prime and knowingly
unredeemable. Sapir contends the planned recapitalisation of European
banks is unsustainable and predicts that a final financial crash
will occur in the winter of 2011/2012. He does not however explain
what might then happen but others have noted that no-one is head-scratching
over HOW banks became undercapitalised, they just seem to accept,
as a religious article of faith, especially in Europe, that banks
have a right to be recapitalised.
French digital media and print magazines are increasingly churning
out 'what if' articles about the survival chances of the Euro
and how and when France might leave the currency union.
The main political protagonist campaigning hard for France to
quit the Euro is the Front National
party , which under its new leader Marine le Pen, is in
the ascendancy and causing serious wobbles to the ruling UMP rightwing
alliance. Others include smaller splinter parties and pressure
groups such as Debout
La République, led by the fiercely anti-Euro politician,
In mid February Rudo de Ruijter of le Blog Économique
et Social writing on the Marianne
website described this as one possible alternative - (see
sidebar story right)
In a gloomy January 19 note Willem Buiter, Chief
Economist at Citibank, analysed the deterioration in public
finances of the world's major advanced economies, arguing conditions
"... there are no absolutely safe sovereigns."
Buiter said the risk of sovereign default is "manifest"
in Western Europe, particularly Greece, Ireland, Portugal and
Spain, and sovereign credit issues will weigh on many countries,
including the United States and Japan, as well as their banks
. Buiter identified countries outside the Euro area - United
Kingdom, Japan, Hungary and the United States - as also vulnerable,
facing higher cost of capital if they fail to address their public
debt burdens. He wrote:
"It is in our view only a matter of time before the US
sovereign will only be able to fund itself through debt issuance
at significantly higher interest rates, reflecting either inflation
risk from eventual monetization of public debt and deficits,
or sovereign default risk, or both,"
When even the giant US economy is described as a "sovereign
default risk" i.e. a possible bankrupt, how much worse can
In May 2010 the well-known Swedish economist Dr. Stefan de Vylder,
responding to a question as to whether Greece was the main culprit
in the Euro crisis, said:
"Greece has until now been the ideal scapegoat, with a
huge fiscal deficit which the previous governments tried to
cover up with creative bookkeeping and outright cheating. But
it was the membership in the currency union that made it possible
for Greece to benefit from low interest rates, a rising Euro
and easy access to cheap credit. Without the Euro, no such tremendous
bubble would have developed in Greece (or in Ireland or Spain).
And the ECB and other EU authorities failed completely to warn
against the danger of the twin deficits - fiscal and current
account balances - which characterise most of the EMU countries.
It is definitely not fair to single out Greece as the big culprit.
The crisis we are witnessing is a crisis for the entire EMU
project, which from the very beginning was based more on political
prestige than on a sound economic analysis."
Europe's politicians, led vigorously by French President Nicolas
Sarkozy and more reluctantly by German Chancellor Angela Merkel,
have reiterated several times now that the Euro will not disappear;
the single currency and the Eurozone are integral to the EU project;
and both, they insist, will be protected " to the death".
Sceptics wonder how close the two leaders really want to come
to a death experience before they find themselves swept aside
by the enormous tsunami the financial markets are now stoking
Reasons why we ought to be wary about figures governments
produce when assessing the true extent of the mess we are
in. The 91 banks stress-tested in the European system in
2010 were reported to require only € 3.5bn in recap
funds, by central banking authority's CEBS, ECB and EC.
As the Wasatchecon report points out, the maths was up the
story... click here
Or try this for an analysis of the latest EU decisions
regarding bailout for the EU's sovereign debt problems.
story... click here